Tech titan Nvidia (NASDAQ:) is gearing up for its earnings reveal once the trading day ends.
Although Nvidia’s earnings report comes later than usual, the excitement surrounding it is palpable.
Analysts are looking at Nvidia to set the tone for the market, with a strong showing potentially fueling a tech stock surge.
Nvidia’s stronghold in the AI arena is unassailable. Its high-performance chips are integral to driving breakthrough technologies such as Google’s Gemini language model and OpenAI’s ChatGPT chatbot.
A stellar earnings report could further cement Nvidia’s dominance and send positive reverberations throughout the tech sector.
Nvidia’s Need for Flawlessness Amid Sky-High Expectations
In light of tonight’s estimates, analysts are eyeing an average EPS of $5.58 – nearly 5 times higher (+411%) compared to the same quarter last year.
Source: InvestingPro
- Sales are projected at $24.59 billion, marking a substantial 242% year-on-year increase.
- Over the past 90 days, analysts have adjusted their EPS predictions by a whopping 308.43%.
Hints suggest that Nvidia might outshine official forecasts. In a recent report, Evercore ISI analysts hinted at Nvidia surpassing both earning and sales expectations.
Nvidia has built a reputation for surpassing expectations consistently, a trend seen in the last 5 quarters.
Source: InvestingPro
Deviation from consensus figures – whether meeting expectations or exceeding them on EPS but falling short on sales, or vice versa – could spell trouble, potentially causing the stock to nosedive.
Additionally, the company’s outlook for forthcoming quarters poses another risk. Cautious guidance could neutralize the positive impact of surpassing predictions.
Constrained Growth Prospects Post a Whopping 92% Rally
With Nvidia shares hovering near their all-time peak, boasting a 92% year-to-date increase and a colossal 206% surge year-on-year, the threshold for inciting profit-taking is low.
Numerous valuation models label the stock as overvalued. The InvestingPro Fair Value, derived from various financial models, sets Nvidia at $788 – 17.4% below the current market price.
Source: InvestingPro
Optimistic as they may be, analysts foresee an 8.9% upside potential for the stock, with an average target of $1038.98. Beyond the impending earnings, the sustainability of Nvidia’s growth in the long haul comes into question as competition intensifies.
Apart from direct rivals AMD (NASDAQ:) and Intel (NASDAQ:), Nvidia is bracing to compete against its own clients as tech giants like Amazon (NASDAQ:), Meta (NASDAQ:), and Microsoft (NASDAQ:) are developing their AI chips.
To Invest or Not to Invest in Nvidia Pre-Earnings?
While Nvidia’s shares could hit new peaks if tonight’s results outdo expectations, investors eyeing tech stocks with a medium-to-long-term outlook might discover more promising ventures.
Despite a potential earnings beat, a surge is not guaranteed for NVDA, especially if expectations soar higher than the consensus suggests.
Even a slight dismay could trigger a drastic downward spiral, not only for Nvidia but the broader market as well.
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Disclaimer: This article serves for informational purposes solely; it does not represent a solicitation, offer, advice, counsel, or recommendation for investment and hence does not aim to provoke asset acquisition in any form. It is crucial to remember that any investment evaluation entails various perspectives and substantial risks, thus all investment choices and related risks rest with the investor.